ANKARA, Turkey — The Turkish government has pressed the launch button for an "aggressive" campaign to give a boost to local industry's exports to existing and new markets.
The government convened an annual ambassadors' conference in Ankara from Jan. 8-14 , bringing together all of the country's on-duty envoys serving in more than 150 foreign capitals.
During the conference, Foreign Minister Mevlut Cavusoglu ordered the ambassadors to cultivate commercial relations with the countries in which they serve, with a view "in particular to the defense industry."
"The message was clear," one Turkish ambassador said. "We are expected to function, in addition to our standard duties, as defense industry export promotion agencies abroad."
Turkey's exports have been on a steady rise since 2011 when the government decided to "nationalize" weapon systems and launch several indigenous programs, including helicopters, drones, frigates and corvettes, tanks, missile systems, and a fighter jet.
Turkey's defense and aerospace exports have almost doubled since then, rising from $883 million in 2011 to $1.68 billion last year. But exports in 2016 remained largely flat from $1.65 billion in 2015, posting a rise of only 1.4 percent.
In 2016, Turkey's top export market was the United States, with $587 million worth of business, almost a third of all Turkish exports. Other top markets were Germany ($185 million), Malaysia ($99 million), Azerbaijan ($83 million), Saudi Arabia, Britain, Qatar, the United Arab Emirates and Tunisia.
"There are strong prospects of a meaningful increase [in exports] in the next five years. An annual export figure of $3 billion is quite realistic, especially when Turkish companies will engage in systems integration, content, subsystems and start producing engines for aerial, naval and land platforms," said Ozgur Eksi, a senior analyst at Istanbul-based C4 Defence.
A procurement official said land and naval platforms will have particularly strong prospects of sales to foreign customers. "Manufacturers [of land and naval platforms], especially armored vehicles makers, have very good chances to win new deals, especially in the former Ottoman lands and in the Turkic states in central Asia," he said. "Some Balkan countries are interested in commissioning Turkish shipyards for naval upgrade programs in addition to some others considering to acquire Turkish-made corvettes and frigates." The former Ottoman lands stretched from the Caucasus to the Balkans, the Middle East and North Africa.
Outside those locales, the procurement official said, some Asian countries like Pakistan and Malaysia are potential customers for Turkish-made naval systems. In 2016, Turkey and Pakistan inaugurated their first naval contract, a $90 million deal for the supply of a 15,600-ton tanker fleet, with STM, a Turkish government-controlled defense engineering company, acting as designer and prime contractor.
Industry sources say Turkey's top armored vehicles manufacturers, Otokar, BMC, FNSS and the newly launched RBSS (a three-way, Turkey-based joint venture between BMC, Germany's Rheinmetall and Malaysia's Etika) are aggressively seeking deals in Gulf and Asian markets.
The procurement official said other potential export items include electronic and electro-mechanical systems, software, management systems, cybersecurity solutions, and flight simulators. Top Turkish exporters in these fields are Aselsan — Turkey's biggest defense company — Havelsan and STM.
"We will see competition [mainly in niche markets] between traditional suppliers who are unwilling to share technology and an emerging group of Turkish rivals who are willing to share," said one London-based Turkey specialist.
"Turkey's local industry faces many challenges from technology to competitiveness," said one company executive involved in exports. "On the other hand, Turkish companies have competitive advantages in engineering quality and low labor costs."
But according to a government official, Turkish solutions and contracts could lure some customers for "strategic" reasons.
"We will have good chances to penetrate in or grow in markets wary of Western companies' embargoes and severe restrictions in technology transfer," he said. "These are conventional suppliers who view these niche markets as mere markets while Turkish companies offer them various forms of partnerships, including work share, local development, co-production opportunities and technology transfer. Our point is 'Let's develop together,' vis-à-vis Western companies' 'I want to sell to you.' "
Burak Ege Bekdil is a Turkey correspondent for Defense News. He has written for Hurriyet Daily News, and worked as Ankara bureau chief for Dow Jones Newswires and CNBC-e television. He is also a fellow at the Middle East Forum and regularly writes for the Middle East Quarterly and Gatestone Institute.